Where does the truth lie in political funding? By Karan Thapar

The decision to reduce the amount of money a political party can receive in cash from any one source from Rs 20,000 to Rs 2,000 looks like a major step that should make funding cleaner. But think carefully and the answer could be somewhat different

Because donations in cash have not been made illegal and because the veil of anonymity continues, it’s quite possible, indeed likely, that the amount of money received in cash will remain unchanged, except it will now be claimed it came in donations of no more than Rs 2,000(REUTERS)

With the recent announcement of the details of the electoral bond scheme, the government’s steps to clean up political funding have met with a sharply polarised response. Admirers claim they’re a far-reaching first step. Critics believe it is pulling the wool over our eyes.

So where does the truth lie? Perhaps it’s easier to answer that question if you examine the measures in terms of two criteria: first, do they make political funding cleaner, in other words with a great proportion of legitimate tax-paid funds? And, second, do they make political funding more transparent, that is to say it’s details fully known to all of us?

The decision to reduce the amount of money a political party can receive in cash from any one source from Rs 20,000 to Rs 2,000 looks like a major step that should make funding cleaner. After all this is what the Election Commission of India asked for. But think carefully and the answer could be somewhat different.

Political parties can still receive donations up to Rs 2,000 and remember they’re anonymous. No names need be declared. So if cash donations above that sum are received all that political parties need do is claim they came in smaller lots of Rs 2,000 or less.

Because donations in cash have not been made illegal and because the veil of anonymity continues, it’s quite possible, indeed likely, that the amount of money received in cash will remain unchanged, except it will now be claimed it came in donations of no more than Rs 2,000. I don’t see much cleaning up here or any transparency.

The second big step is the decision to create electoral bonds, issued by select branches of the State Bank of India, on cheque or digital payment, which can be credited to the authorised accounts of political parties (for investment within 15 days) while retaining the anonymity of the donor. Again, at first sight, this sounds like a great idea. But is it?

First, to be honest, the government has ensured a 100% cleaning up. Because the bonds will be bought by cheque or digital payment they can only be bought by tax-paid and not black money.

Alas, the second half of the story is very different. Because the anonymity of donors is guaranteed there will be no transparency. This breaches the principle that in a democracy we have a right to know who is funding political parties and with what amounts.

In fact, the sad truth is by this measure the government has actually diminished the transparency that used to exist. Up till now all donations above Rs 20,000 had to be declared, which means the names of the donors were made public. Now, through these electoral bonds, the names of individuals or companies that make donations — be it Rs 2 or Rs 20 lakh, Rs 20 or Rs 200 crore — will not be disclosed. This is undoubtedly a retrograde outcome.

There is, however, one that’s arguably worse. Because the government has also lifted the cap on corporate donations, industrialists can now pay vast sums anonymously to the ruling party. If, in return, there’s a quid pro quo and, remember, in India there usually is, not only will we never be able to prove it, we might even never find out about it. Which means that in this case the potential for corruption has actually grown, not diminished.